London Stock Exchange may dump Microsoft system

The London Stock Exchange may abandon its Microsoft Windows-based trading system, after technical problems shut down trading for seven hours last September.

Though the LSE denied the outage was caused by the TradElect system, it is widely believed in London trading circles that the problem was the Windows-based platform, Computer World reported.

On Sept. 8, just as the U.S. bailouts of Freddie Mac and Fannie Mae caused surging stocks, traders stormed out of the LSE building unable to do potentially booming business. Reuters reported that a system glitch caused the outage.

The shutdown added to mounting pressure from the LSE’s competitors, which use different trading platforms. TradElect’s ability to process trades, analysts say, hasn’t rivaled that of a newer Linux-based system, ChiX, or another called Turquoise.

In May, the LSE ousted CEO Clara Furse and installed Xavier Rolet. He immediately cut jobs and started reviewing the TradElect system, which was developed with help from Accenture and went live in June 2007.

“Dropping TradElect would be a dramatic about-face for the exchange, which had heavily promoted its ability to rival newer, dedicated electronic exchanges, and plumbed millions of pounds into doing so,” wrote Computer World’s Leo King London. “It runs on HP ProLiant Servers and Microsoft .Net and SQL Server 2000 systems, and within a Cisco network architecture.”

Carl de Souza/AFP/Getty Images

New London Stock Exchange CEO Xavier Rolet poses for the media outside the LSE on Feb. 13. The LSE was fulsome in praise for outgoing CEO Clara Furse, who eventually left in May.

Microsoft has touted its involvement with the London Stock Exchange, notably in its “Get the Facts” ad campaign promoting Windows over Linux for such gigantic tasks. A promotional video is available (streaming WMV) on the LSE page of Microsoft’s “Get the Facts” Web site.

Microsoft also boasts running the LSE system in a case study. The Web page is clearly outdated, since it mentions having no production outages in six years.

But last week, the Financial Times reported, the LSE “appears set” to dump the Windows-based system.

An LSE spokeswoman told Reuters that last year’s system failure was not a motivation.

“The issue with the software … was a combination of circumstances and a fix has been put in place. Nonetheless, because it’s a very fast-moving business we need to remain competitive and will always keep technology under review,” the spokeswoman told Reuters last week. “We’re looking at our trading system and we’re looking at what our options are. There haven’t been any decisions made at all.”

With reference to the recent media speculation, The London Stock Exchange confirms that it is looking at the future of its technology provision. However no decisions have yet been made about future solutions and the TradElect system remains in full operational use.

The London Stock Exchange is the world’s third-largest share market.

But Ajay Shah, a senior fellow at the National Institute for Public Finance and Policy in New Delhi, India, pointed out in a blog post that the LSE ranks much lower in trades per second. Based on official numbers, Shah estimated the LSE executes about 30 trades per second – the New York Stock Exchange does an estimated 590 per second.

All of the LSE’s transactions are funneled through and managed by the TradElect system.

Shah suggests that, when you look at those numbers, the London Stock Exchange and its Windows-based trading platform are not as impressive as they sound.